Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top sellin cereal at a price of $21,800 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Direct material Direct labor Manufacturing overhead. $13,100 4,900 7,100 Total $25,100 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. A. Calculate the differential cost of Acme? B. Should Almond Treats make or buy the almond cereal?
Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top sellin cereal at a price of $21,800 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal: Direct material Direct labor Manufacturing overhead. $13,100 4,900 7,100 Total $25,100 The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs. A. Calculate the differential cost of Acme? B. Should Almond Treats make or buy the almond cereal?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Almond Treats manufactures various types of cereals that feature almonds. Acme Cereal Company has approached Almond Treats with a proposal to sell the company its top selling
cereal at a price of $21,800 for 20,000 pounds. The costs shown are associated with production of 20,000 pounds of almond cereal:
Direct material
Direct labor
$13,100
4,900
7,100
$25,100
The manufacturing overhead consists of $2,000 of variable costs with the balance being allocated to fixed costs.
Manufacturing overhead
Total
A. Calculate the differential cost of Acme?
B. Should Almond Treats make or buy the almond cereal?
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